Earn Passive Income from Highway Tolls: A Comprehensive Guide to Investing in InvITs in India

The “Toll Booth” Reality Check

Picture this: You are driving on the Mumbai-Pune Expressway or cruising down a sleek National Highway. You reach a toll plaza, roll down your window, scan your FASTag, and ₹100 or ₹300 vanishes from your account in seconds. You drive away, perhaps annoyed at the expense.

Now, pause for a second.

That ₹300 didn’t just disappear. It went into a system. On the Mumbai-Pune Expressway alone, nearly 75,000 cars pass through daily. At an average toll of ₹320, that single highway generates approximately ₹2.4 Crore in a single day. That’s ₹72 Crore a month. ₹864 Crore a year.

And that is just one highway. India has a network of over 1.45 lakh kilometers of National Highways, where cash registers are ringing every single second.

For decades, this massive river of cash flowed only into the pockets of the government or massive construction conglomerates. But the rules have changed. What if I told you that you could reverse the flow of that money? What if a small percentage of every toll collected could end up in your bank account?

This is not a “get rich quick” scheme. This is not illegal. This is a government-backed, SEBI-regulated, and RBI-approved financial instrument that the wealthy have been using for years. It is called an InvIT (Infrastructure Investment Trust).

Today, we are going to unlock this secret door to infrastructure ownership. You can start with as little as ₹100-₹200, become a partial owner of India’s biggest highways, and earn a regular income that beats most Fixed Deposits.

The Infrastructure Boom: Why Now?

To understand why this opportunity exists, you have to look at the bigger picture of India’s economy. The Government of India has a laser focus on infrastructure development. From the Gati Shakti master plan to the Bharatmala project, roads are being built at a record pace.

However, the government has a limitation: Capital.

Building a highway costs thousands of crores. If the government spends all its money building roads, it has no funds left to maintain them or build new ones. They need a way to “recycle” their capital.

This is where the Public-Private Partnership (PPP) model comes in. The government (or a private developer) builds a road. Once the road is complete and toll collection starts, they want to sell that “asset” to get their cash back immediately so they can build the next road.

But who has ₹10,000 Crore to buy a highway? Not you, not me, and not even most banks.

Enter the InvIT.

What is an InvIT? (The “Mutual Fund” of Highways)

InvIT stands for Infrastructure Investment Trust.

If you understand how a Mutual Fund works, you already understand 90% of an InvIT.

• Mutual Fund: Pools money from thousands of investors to buy Stocks (Shares).
• InvIT: Pools money from thousands of investors to buy Infrastructure Assets (Roads, Power Lines, Gas Pipelines).

When you buy a unit of an InvIT, you effectively become a shareholder in a portfolio of operational infrastructure projects. You are not funding the construction of a road (which is risky because it might get delayed). You are buying into a road that is already built, already has traffic, and is already earning toll revenue.

The InvIT manages these roads, collects the toll tax, maintains the potholes, pays the staff, and then—here is the magic part—distributes the profit back to you.

The “Golden Rule” of InvITs: Mandatory 90% Distribution

You might be thinking, “Okay, companies make profits all the time, but they don’t give it to me. Reliance doesn’t give me all its profit. Tata doesn’t give me all its profit. Why would an InvIT?”

This is the distinct advantage of this instrument.

InvITs are governed by the SEBI (Infrastructure Investment Trusts) Regulations, 2014. According to Chapter 6, Regulation 18, Sub-Regulation 16, the law states:

“The Investment Manager shall distribute not less than 90% of the Net Distributable Cash Flows to the Unit holders.”

This is not optional. It is mandatory.

If an InvIT collects ₹100 Crore in net profit from tolls after expenses, it must legally distribute at least ₹90 Crore to investors like you. They cannot hoard the cash. This makes InvITs one of the most reliable sources of passive income in the Indian financial market.

Real-World Case Study 1: IRB InvIT Fund

Let’s look at the first-ever listed InvIT in India: The IRB InvIT Fund.

Launched in 2017, this trust is sponsored by IRB Infrastructure Developers, one of India’s leading road builders. As of the latest financial data, here is what you own when you buy their unit:

• Portfolio: They own and operate 7 major highway assets.
• Locations: These roads are spread across Maharashtra, Gujarat, Rajasthan, Karnataka, Tamil Nadu, and Punjab.
• Asset Value: The total value of these roads is roughly ₹7,250 Crore.
• Longevity: The weighted average life of these assets is around 17 years. This means you have visibility on toll income for nearly two decades.

** The Income Potential:**
For the Financial Year 2024, IRB InvIT distributed ₹8.00 per unit to its investors.
The current market price of one unit (as of late 2024) hovers around ₹60.

Let’s do the math:

• Investment: ₹60 (approx)
• Annual Return: ₹8
• Yield: ~13.3%

Compare this to a Fixed Deposit giving you 7% or a rental property giving you 2-3%. An InvIT is generating nearly double the return, and the money lands in your bank account every quarter (every 3 months).

Note: Stock prices fluctuate. If the price goes up to ₹70, the yield percentage drops, but your capital grows. If the price drops to ₹50, the yield percentage rises.

Real-World Case Study 2: National Highways Infra Trust (NHIT)

If you are a conservative investor who trusts the Government more than private companies, say hello to NHIT.

NHIT is sponsored by the National Highways Authority of India (NHAI) directly. These are roads built by the government’s own arm.

• Backing: Government of India (MoRTH).
• Listing: It listed in 2021 and has been acquiring more roads from NHAI.
• Current Price: Approximately ₹148 – ₹149.
• Yield: While IRB offers higher yields (riskier), NHIT typically offers a yield of 6% to 8%, but with significantly higher safety and capital stability.

NHIT recently concluded a massive fundraising round where they invited retail investors to buy units, promising a stable return that beats inflation.

Comparison: InvITs vs. Traditional Investments

To truly appreciate the value of an InvIT, we need to compare it against the traditional ways Indians save money.

As you can see, InvITs sit in a “sweet spot.” They offer the regular cash flow of a rent-paying property without the headache of finding tenants, maintaining the building, or needing crores of rupees to buy the asset.

How to Earn “Growth + Dividend” (The Double Benefit)

One of the biggest misconceptions is that InvITs only give dividends. That is false. You actually have two ways to win:

1. The Cash Flow (Distribution): As discussed, you get money in your bank every 3 months.
2. Capital Appreciation (Price Rise): As toll rates increase (which happens annually due to inflation linkage) and traffic increases (more cars on the road), the revenue of the Trust goes up. When revenue goes up, the unit price on the stock market tends to rise.

If you bought IRB InvIT units a few years ago at ₹40, today you would be sitting on a price of ₹60 (50% profit) PLUS you would have received ₹8-₹10 in dividends every year.

Taxation: The “Secret” Advantage

Taxation on InvITs is slightly different from shares, and it can be very beneficial for retail investors. The money they distribute is usually broken into three parts:

1. Interest Income: Taxable at your slab rate.
2. Dividend Income: Usually tax-free if the InvIT has accepted a specific tax regime (SPV level).
3. Return of Capital: This is often tax-free in the hands of the investor (though it reduces your “buy price” for future capital gains calculations).

Note: Always consult a CA, as tax laws are subject to change in every Budget.

Risks: What You Must Know

I promised you a transparent guide, not a sales pitch. While InvITs are powerful, they are not risk-free. Here is what you need to watch out for:

1. Traffic Risk: If a new alternative road is built and traffic on the toll road drops, revenue drops. (However, highway traffic in India has historically only gone up).
2. Interest Rate Risk: InvITs are sensitive to RBI interest rates. If RBI increases interest rates, InvIT prices often fall, and vice versa.
3. Limited Timeframe: Unlike a company like Tata Motors which can exist for 100 years, a toll road concession is usually for 20 or 30 years. After that, the road goes back to the government. The InvIT must keep buying new roads to survive.

How to Invest in InvITs Today

Investing in highway tolls is no longer a complex legal process involving lawyers and property papers. It is as simple as ordering a pizza.

Prerequisites:

• A Bank Account.
• A Demat Account (Zerodha, Upstox, Angel One, Groww, etc.).

Steps:

1. Open your Demat App.
2. Search for the Ticker Symbol.
   • For IRB, search: IRBINVIT
   • For NHAI, search: NHIT
   • For Power Grid (Power lines), search: PGINVIT
3. Check the Price. (e.g., ₹60 or ₹148).
4. Click Buy. Enter the quantity (e.g., 100 units).
5. Confirm Order.

That’s it. You are now a partial owner of India’s national highways. The next time you pay a toll, you can smile knowing that a fraction of that money is finding its way back to you.

Conclusion: Don’t Miss the Bus

The wealthy have always had access to “cash cow” assets like commercial real estate and infrastructure projects. For the first time, the Government of India and SEBI have democratized this access for the common man (the “Aam Aadmi”).

You can start small. You don’t need lakhs; you need barely ₹100.

By ignoring InvITs, you are leaving 90% of the toll profits on the table for others to claim. Whether you want to build a secondary income stream, save for retirement, or just hedge against inflation, InvITs offer a compelling solution.

Do your research. Go to the NSE/BSE websites. Read the annual reports. But do not ignore this asset class. The highways of India are paving the way to prosperity—make sure you are on the ride.

(Disclaimer: I am not a SEBI registered financial advisor. This article is for educational purposes only. Please consult your financial advisor before making any investment decisions.)

References

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• BSE India — for corporate results and announcements.

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